Substantial Question of Law at the Admission Stage of Appeal

The Supreme Court, on September 21, 2023, ruled that High Courts should typically formulate substantial legal questions at the admission stage when exercising their Second Appeal jurisdiction under Section 100 of the Code of Civil Procedure, 1908. However, if such questions are framed later, the Court must grant the concerned parties sufficient time to address and respond to them before rendering a final decision.

This judgment came in response to an appeal against a Second Appeal order issued by the Nagpur Bench of the Bombay High Court. In that case, the High Court had framed substantial legal questions and subsequently decided the appeal on the same day, overturning the findings of fact from lower courts and dismissing the plaintiff’s specific performance suit.

The Supreme Court referred to the case of Amar Singh v. Dalip Singh, which emphasized the importance of framing substantial questions of Law. It stated that the primary purpose of framing such questions is to allow parties to prepare and present their arguments on those specific legal issues.

When the Court formulates substantial questions of Law, they must be communicated to the parties, and the parties should be given the chance to present their arguments on these questions. Additionally, if any additional questions are framed during the hearing, the Court should hear the parties’ arguments. This ensures a fair and comprehensive consideration of legal issues in the appeals process.

In the instant case, taking note of the questions framed, the bench said that neither of the questions framed by the High Court constituted a question of Law, let alone a substantial one. No dispute was presented before the High Court concerning the interpretation or legal consequences of any document, nor was there any misapplication of a legal principle in document interpretation or otherwise that could have given rise to a legal question. Furthermore, no debatable issue before the High Court had not already been addressed by established legal principles or precedents. To be deemed substantial, a legal question should be open to debate, not previously settled by existing Law or binding precedents. It must significantly impact the case’s decision or the parties’ rights if answered in either direction. Certain conditions must be met to qualify as a question of Law involved in the case.

• Firstly, there must be a foundation for the question in the pleadings, which should arise from the factual findings made by lower courts.
• It must also be necessary to decide that question of Law for a just and proper decision in the case. An entirely new point raised for the first time before the High Court can only be considered a question involved in the case if it goes to the fundamental aspects of the matter.

The criteria for determining when a question of Law becomes a substantial question of Law were established by a Constitution Bench of the Supreme Court in the case of Sir Chunilal Mehta & Sons Ltd. vs. Century Spg. & Mfg. Co. Ltd. According to this judgment, a question of Law can be deemed substantial:

• If it possesses general public importance, significantly impacts the parties’ rights, remains unsettled by the highest courts, lacks clarity, or requires a discussion of alternative viewpoints.
• If the question is settled by the highest Court or the applicable legal principles are well-established, and there is only a matter of applying those principles, or;
• If the plea raised is unreasonable, it would not be considered a substantial question of Law.

According to the Supreme Court’s jurisprudence, if a question of Law is settled by the highest Court or the governing legal principles are well-established, and the issue at hand is simply the application of those principles, or if the argument presented is blatantly unreasonable, then it does not qualify as a substantial question of Law. This principle was reaffirmed in the case of Hero (Vinoth vs Seshammal), where the Court referred to and relied on the Chunilal vs. Mehta & Sons case and other judgments. The tests to determine whether a set of legal questions constitutes mere questions of Law or substantial questions of Law were summarized in Hero’s case.

The term “substantial question of law” in Section 100 of the Code of Civil Procedure does not necessarily imply a question of Law of general importance. It signifies a substantial question of Law directly involved in the case at hand. This interpretation was validated in the case of Guran Ditta vs. Ram Ditta, where it was established that the term did not refer to a substantial question of general importance but rather a substantial question of Law inherent to the case.

In the Sir Chunilal case, a Constitution Bench concurred with the view expressed by a Full Bench of the Madras High Court in Rimmalapudi Subba Rao v. Noony Veeraju, which asserted that a question of Law is substantial when it is open to debate, allows room for differing opinions, or necessitates an extensive discussion of alternative perspectives. Conversely, if a question is effectively addressed by a previous judgment of the highest Court or if the fundamental legal principles governing it are well-established, making it a matter of straightforward application to the case’s specific facts, it does not qualify as a substantial question of Law.

In a Second Appeal, the High Court’s jurisdiction is limited to addressing substantial questions of Law. It is not permitted to challenge findings of fact, even if the evaluation of evidence appears to be erroneous. The factual conclusion is incorrect, as established in the case of Ramchandra vs Ramalingam. An entirely new legal point, introduced before the High Court will only be considered a question involved in the case if it strikes at the core of the matter.

In the case of Biswanath Ghosh vs. Gobinda Ghose, the Supreme Court emphasized the mandatory nature of formulating substantial questions of Law in Second Appeals under Section 100 of the Code of Civil Procedure, 1908. The key points from this case are: When no substantial question of Law is properly formulated in a Second Appeal, and the High Court proceeds to decide the appeal, the judgment of the High Court is legally flawed. Formulating a substantial question of Law is a mandatory requirement, and merely referring to the grounds mentioned in the Memorandum of Second Appeal does not fulfill the mandate of Section 100. The Judgment and Order of the High Court must discuss and decide the specific question of Law involved in the case. The presumption that “possession follows title” applies only in cases without concrete evidence of possession by any other party.

This case underscores the importance of adhering to the procedural requirements and ensuring that substantial questions of Law are properly formulated and addressed in Second Appeals to maintain the integrity of the judicial process.

• A substantial question of Law is open to reasonable argument, allowing for differing opinions or requiring the Court to extensively address and discuss various perspectives. It arises when there is room for debate, or the Court must delve into the question in detail, exploring alternative viewpoints.
• Conversely, a question is not substantial if it is effectively resolved by a prior judgment of the highest Court or if the fundamental legal principles applicable to it are well-established, making it a matter of straightforward application to the specific facts of the case.
• A substantial question of Law must be debatable, not definitively settled by existing legal precedent. It must significantly impact the case’s decision or the parties’ rights, regardless of how it is answered.
• Determining whether a question of Law is substantial and whether it is involved in a case depends on each case’s unique facts and circumstances. The primary consideration is to strike a balanced approach between the essential duty to administer justice at all stages and the necessity to prevent unnecessary prolongation of legal proceedings. This principle is supported by the decision in the case of Santosh Hazari vs. Purushottam Tiwari (2001) 3 SCC 179.

The term ‘appeal’ is not explicitly defined in the Code of Civil Procedure, 1908. However, according to Black’s Law Dictionary, an appeal is a complaint made to a higher court regarding an injustice or error committed by a lower court, with the expectation that the higher Court will correct or reverse the judgment or decision of the lower Court. It involves transferring a case from a lower court to a higher court to obtain a review and retrial.

A second appeal is specifically provided for in the Code of Civil Procedure context. It allows parties to challenge the decree issued by the lower Court that initially heard the first appeal. An appeal is a substantive right granted by statute and can only be pursued when expressly prescribed by the relevant legal provisions.

The second appeal has been defined under section 100 of the Code of Civil Procedure. Section 100 of the Civil Procedure Code grants the procedural right of filing a second appeal to either of the parties involved in a civil suit who has been adversely affected by the decree issued by a civil court. However, this second appeal can only be made to the High Court if the Court is convinced that the case raises a substantial question of Law.

The right to appeal, including the second appeal, is a legal instrument provided by statute. It does not fall under the principles of natural justice, and individuals cannot approach the Court for an appeal unless the statute specifically grants it. The Supreme Court, in the case of Anant Mills Co. Ltd. v. State of Gujarat, emphasized that the “right of appeal is a creature of statute.” The legislature can impose conditions for exercising such a right as long as those conditions are manageable as to render the right illusory or practically impossible to exercise.

In other words, the provision allows a dissatisfied party from the lower Court’s decision to seek further redress through a second appeal. Still, this appeal must be based on substantial legal questions rather than questions of fact. The High Court’s role is to review and decide cases where a genuine legal issue is at stake.

Section 101 of the Civil Procedure Code stipulates that a second appeal can only be filed based on the grounds specified in the Code. This means that a party seeking a second appeal must have valid legal grounds as per the provisions outlined in the Code. The scope of application of a second appeal has been restricted by Section 102 to cases where the subject matter of the original suit exceeds three thousand rupees. In other words, a second appeal can only be filed in cases where the dispute’s value or the original suit’s subject matter is more than three thousand rupees.

Section 102 of the Civil Procedure Code establishes a financial threshold for filing a second appeal. It states that no second appeal is allowed in cases where the subject matter of the original suit for monetary recovery does not exceed Rs 25,000. In other words, if the dispute involves a claim for less than or equal to Rs 25,000, parties cannot file a second appeal; their recourse would be limited to lower courts. These provisions are in place to regulate the scope and eligibility for filing second appeals, ensuring that they are pursued based on substantial legal grounds and for cases involving significant financial claims.

The Supreme Court, in a case where the Orissa High Court dismissed a second appeal without assigning any reasons, has held that the High Court cannot dismiss a second appeal in limine without providing reasons for its decision. In this eviction suit, a second appeal was filed before the High Court, which dismissed it without stating any reasons, simply stating that it did not find any question of Law for admitting the appeal. The Supreme Court explained the provision under Section 100 of the Civil Procedure Code (CPC), which allows for a second appeal to the High Court. According to Section 100(1) of the CPC, the High Court can only entertain a second appeal when it is satisfied that the case involves a substantial question of Law. Once satisfied, the High Court must formulate that question and issue notice to the respondent for further proceedings.

The Supreme Court emphasized that when a second appeal does not involve any substantial question of Law, the High Court must still provide reasons for its conclusion. Providing reasons is crucial as it helps the party whose appeal is being dismissed to understand why their arguments were not accepted. The Court stressed that even when dismissing an appeal at the admission stage, the High Court must demonstrate its conscious application of mind by recording reasons. Consequently, the High Court cannot simply dismiss a second appeal in limine without assigning reasons for its decision.

In conclusion, a second appeal is a vital legal recourse in the Indian judicial system, allowing parties to challenge decisions of subordinate courts before the High Court. However, this right is not absolute and comes with certain statutory limitations. Section 100 of the Civil Procedure Code outlines the conditions for entertaining a second appeal. The High Court can exercise jurisdiction only if satisfied that the appeal involves a substantial question of Law. Even when dismissing an appeal for not meeting this criterion, the High Court must provide reasons for its decision. This practice is essential for transparency and accountability in the judicial process, ensuring parties understand why their arguments were not accepted. The Supreme Court has consistently upheld this principle, emphasizing that the right to appeal is statutory, and conditions can be imposed as long as they do not render the right illusory. While a second appeal is a valuable avenue for seeking justice, it is bound by statutory provisions and the need for reasoned decisions, ensuring the fair and equitable administration of justice in India.